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Broker Tips: Chamberlin, BAE Systems, Domino’s Pizza

Broker Tips: Chamberlin, BAE Systems, Domino’s Pizza
  • Cenkos revises down EBITDA estimate for Chamberlin
  • FinnCap issues positive update on Quartix Technologies
  • Goldman Sachs raises BAE Systems target price
  • Deutsche Bank starts coverage of Domino’s Pizza Group
  • Citigroup trims Entain target price

Cenkos has reaffirmed their ‘buy’ rating for Chamberlin (LON: CMH), with a target price of 7.3p, despite revising down an estimated adjusted EBITDA for 2022. Its most recent full year trading update showed “positive momentum” and a “continued strengthening of the Group’s operations driven by the recent change in the Group’s strategy”. Cenkos also notes that the company has a full order book, that it has fixed the cost of its electricity until 2025, which stabilises costs at a time of uncertainty, and that the company also trades at a material discount to its peer group of casting and steel manufacturers. At close of trading yesterday, the stock was priced at 4.9p, a return of -32.90% YTD and -54.19% over 12 months.

FinnCap has issued a positive update on Quartix Technologies (LON: QTX), with continued strong growth in new telematics subscriptions (up 26% yoy) driving solid revenue growth and a good 1H performance, which means that QTX is comfortably on track to meet growth, profit and cash expectations. Qartix, which is a provider of fleet tracking software, said that new-unit subscriptions in Europe and the UK continued to perform strongly, and that new strategic initiatives for the US market are expected to add unit growth. FinnCap gives the stock a neutral ‘corporate’ rating, while upgrading the target price to 525p, from the current 316.5p, (at close of trading yesterday), which indicates a potential upside of 66%. The stock has a return of -20.86% YTD and -35.71% over 12 months.

Goldman Sachs has raised BAE Systems (LON: BA) target price to 805p (752p), with a ‘neutral’ rating. The broker consensus however is more positive, with Deutsche, Berenberg and Citigroup all recommending a ‘buy’. The stock has performed strongly so far this year, particularly after Russia’s invasion of the Ukraine has set governments to increasing their defence budgets. BAE Systems is Europe’s largest defence contractor, manufacturing fighter jets, warships, armoured vehicles and rocket systems, and therefore operates on the basis of multi-year government contracts. BAE can also expect to benefit from a new spending bill in the US, signed in March, which increased defence spending to $743bn this year and $773bn in 2023. Demand for its products can be expected to remain strong. At close of trading yesterday, the stock was priced at 820.4p, a return of 49.2% YTD and 53.0% over 12 months.

Deutsche Bank has started coverage of Domino’s Pizza Group (LON: DOM) with a ‘buy’ rating and a target price of 355p on the basis of a post-Covid recovery in the UK restaurant sector. In fact, after a poor 1H, Domino’s share price has recovered strongly, gaining more than 22% since bottoming out on 18 May. Deutsche analysts said that although most operators are looking to expand their store network, the near-term outlook remains clouded, putting UK consumer spend under pressure, therefore favouring defensive stocks. At close of trading yesterday, the stock was priced at 290p, a return of -36.8% YTD and -28.5% over 12 months.

Citigroup has trimmed the Entain (LON: ENT) target price to 2,700p (2,800p), while retaining a ‘buy’ rating. Entain, a sports betting company that owns Bwin, Coral, Ladbrokes, PartyPoker and Sportingbet, last week said it expects its online gaming revenue to be flat this year, as customer spending takes a hit from the cost-of-living crunch. At close of trading yesterday, the stock was priced at 1,093p, a return of -35% YTD and -41.4% over 12 months.

This article is not investment advice. Investors should do their own research or consult a professional advisor.

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